Tag: Tax

Which of the following would lead to demand-pull inflation?

Select ONE answer:

1. Rising import prices
2. Increase in wages
3. Increases in indirect taxation
4. High consumer expenditure such that aggregate demand exceeds aggregate supply

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct == > Aggregate demand exceeding aggregate supply is an example of demand-pull inflation.

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The government may seek to reduce the rate of demand-pull inflation by any of the following means except?

Select ONE answer:

1. Reducing interest rates
2. Increasing VAT
3. Applying more stringent controls over bank lending
4. Reducing public expenditure

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > Public expenditure represents the government’s own demand. Bank lending is largely used for spending on goods and services by the people who borrow the money. Higher VAT could increase total spending on goods and services inclusive of the tax, but spending net of tax will fall, and this should result in a reduction in demand-pull inflation. Lower interest rates is likely to result in higher consumer borrowing and even stronger demand-pull inflation.
2. Not correct
3. Not correct
4. Not correct

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The recession phase of the business cycle will normally be accompanied by all the following except?

Select ONE answer:

1. A rise in the rate of inflation
2. A fall in the level of national output
3. An improvement in the trade balance
4. A rise in the level of unemployment

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > Recession and declining demand go together. Inflation and declining demand do not. The trade balance is likely to improve due to a decrease in demand for imports.
2. Not correct
3. Not correct
4. Not correct

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Which of the following is the correct sequence in a business cycle?

Select ONE answer:

1. Boom, Recession, Depression, Recovery
2. Recession, Recovery, Boom, Depression
3. Boom, Recovery, Recession, Depression
4. Recovery, Recession, Depression, Boom

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > When an economy booms, it reaches a turning point and goes into recession. The recession deepens into a depression. Eventually, there is another turning point in the economy, and the business cycle goes into recovery and then back into boom, and so on.
2. Not correct
3. Not correct
4. Not correct

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The marginal propensity to consume measures?

Select ONE answer:

1. The relationship between changes in consumption and changes in consumer utility
2. The proportion of household incomes spent on consumer goods
3. The proportion of total national income spent on consumer goods
4. The relationship between changes in income and changes in consumption

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct == > The relationship between changes in income and changes in consumption.

This work is licensed under a Creative Commons Attribution 4.0 International License.